Vehicle Question

[cag]

Going chapter 7 in Aug., I have a vehicle that will be paid in full in Junevalue is $4700

[StartingOver08]

By rewrite the loan, do you mean use the vehicle as collateral to borrow $3700 from the credit union just before you file?

[cag]

By rewrite the loan, do you mean use the vehicle as collateral to borrow $3700 from the credit union just before you file?

Yes, using the same vehicle and they still have the title... I still have a couple of payments left

[pcn]

I wish we could do that, our debt to income ratio isn't good enough to get our bank to loan the money. Id really feel better protecting my truck. Our lawyer said that if its less than 5k or so they probably wont go after it because the effort to get it from us & pay to have it sold wouldn't leave much over the measly AL exemption.

[cag]

I hear that!! Mine's almost paid off and now I'm forced to go deeper in debt just to protect it....still don't know if I can even do it

[HHM]

What is the vehicle exemption in your state?

However, you do run some risk. Intentionally encumbering an asset to protect it from the bankruptcy estate is a type of bankruptcy fraud. The trustee could file suit against the credit union to "avoid" the lien and grab the car anyway.

There are a few ways to deal with non-exempt assets.
1. Sell and spend.
Sell the asset and spend the money. In this case, I would probably recommend selling the car and using some of the money as a down payment on another car.
2. Redeem.
You can redeem the car from the BK Estate. What you are essentially proposing is redeeming the vehicle anyway, but this is the "legal" way to do it. You get a loan (like 722redemption) and essentially buy the vehicle from the BK estate.
3. Surrender.
Surrender the asset to the BK estate and let the trustee deal with it.

[cag]

Thanks HHM for the reply
The thing is there are two vehicles involved, one will be safe with CT vehicle exemption the other is exposed.
Instead of selling it and buying another...How about if I just traded it in toward another...would that work?

[StartingOver08]

Yes, that would work. Perfectly legal.

[cag]

Thanks StartingOver...will do